Archive for the ‘Marketing Theory’ Category

Marketing Communication: It’s All About Meaning

Friday, February 12th, 2010

In celebration of Valentine’s Day, I want to proclaim my love for the expert use of words. I liken word definitions to a gradient. Synonyms of a word retain the color of the original but vary dramatically in shade. I illustrated this concept based on the age-old question,”What is the true meaning of love?”


Meaning of Love – Larger version

If you click through to the larger version, you can see that following synonyms of a word can lead to some surprising definitions. In business and marketing, it is especially important to know exactly what words mean to your audience. Using the perfect words can help us communicate more perfectly.

For example, I was purchasing a gift card last night and was disappointed to see that the gift cards came in specific dollar amounts. I asked the salesperson, “Do you offer gift cards in variable denominations?” I realized I had chosen the wrong words when my question was answered with a blank stare. Trying again, I asked, “Can I get a gift card with any amount I want on it?” “Oh sure,” he replied. There are many ways to say any one thing. The goal of good communication is to find the words best suited to the person hearing or reading them.

What are some ways you could improve communication with your customers? Here are some thought starters:

  • Most businesses use jargon and acronyms. When you use them with your customers, do they understand what you mean?
  • Email and text messaging are notoriously bad at conveying inflection and context. Do the messages you send carry a double meaning if read differently?
  • The best way for your customers to understand you is if you talk like they do. Do you listen for their terms and phrases? Do you use them in communication?
  • How often do you listen to your customers? Do you make an effort to understand them?

If you talk to your customers in ways that are meaningful to them, your message will be more successful. Get to know different types of customers, the ways they describe your business, what they expect from the relationship with you and what words that they use. Successful communication will lead to success with your business goals.

(In future articles, I’ll delve into how to develop business goals for your small business. Marketing starts with knowing what results you want.)

What experiences are you creating for your customers?

Friday, January 8th, 2010

With a small business, marketing can be defined as, “The experiences you create for your customers.”

One of the most powerful concepts in marketing is Brand Harmony, developed by Steve Yastrow. I work closely with Yastrow & Company, and have seen the benefits of Brand Harmony for our client companies. Steve Yastrow’s book of the same name, Brand Harmony, defines your brand as, “Every experience your customer has with your company.” (14) If these experiences blend into a harmonious whole, your customer develops a rich, positive brand impression of your company and products.

A company we work with, Prairie City Bakery, creates a great experience with their baked products. They sell baked goods such as cookies, muffins and doughnuts to food service vendors, convenience stores, drug stores, etc. They have faced the challenges of offering a great-tasting and high-quality product while also providing a quick snack for consumers. Part of this experience is the packaging, which makes it look homemade. President Bill Skeens is fond of saying, “People eat with their eyes,” a statement which shows an understanding of the importance of customer experience.

Netflix also creates good customer experiences. The system learns which movies you like and dislike to recommend other titles to you. If you lose a DVD, they don’t accuse you of stealing it. With their increasingly populated Watch Instantly section, you hardly even have to bother with DVDs. (But every company has room for improvement. Netflix team members…if you are reading this… please add a “Holiday” movies genre. It’s ridiculously difficult to find those titles.)

Each time a customer comes into contact with you or your products, you are creating an experience for that customer, even if you aren’t trying. Sometimes, especially if you aren’t trying. The worst– and most memorable–customer experiences come from brand disharmony.

How many times have you heard the phrase, “The system won’t let me.” from a customer service representative or retail store cashier? Technology is an area where many companies create disharmony. Rarely are systems designed with the customer experience in mind. Recently, I discovered that my bank’s idea of offering electronic payment is to print a physical check and mail it to my vendors for me. Imagine my surprise when I received a late notice from a vendor that I had paid “electronically.” The bank told me they needed four days’ notice to process the payment, and I had only given them two. How is that a better experience than simply writing and mailing a check myself? Why would they design such a useless system?

When you create brand disharmony, you confuse your customers. They don’t know what to think about you– Even worse, they know exactly what to think about you, and it’s unfit for print. But when the experiences you’ve created for your customers create Brand Harmony, they feel an affinity for your company and have a rich sense of why they want to buy from you.

Think of some companies you have an affinity for and that create great Brand Harmony with you. What experiences do you have with those companies? Now, ask yourself: How can I gain inspiration from these companies? What experiences should I create with my customers?

Don’t just think of your “traditional” marketing communications. Customers don’t care if your billing department and marketing department are separated by a chasm. If your invoices and advertisements don’t create complementary experiences, your brand will be weak in their minds.

By thoughtfully considering what experiences your customers should have and putting those thoughts into action, you can help your customers know exactly why they buy from you. If they have a good answer for that question, they will be less likely to switch to a competitor or make do with a substitute product or service.

Paint-By-Numbers Marketing

Friday, January 1st, 2010

Marketing Technology is Not Enough

Advances in marketing technology allow us to learn so much about our customers. With the information customers share with us, it’s never been easier to develop customer relationships and loyalty. But when the technology is used to create paint-by-number experiences, customers will feel a dissonance and know you aren’t actually interacting with them. Customers are very clever and can tell when companies use marketing technology against them instead of for them.

Laura Poland, an Indianapolis wedding photographer and close friend, experienced this technology dissonance first-hand with OvernightPrints.com. She usually orders business cards and brochures using her professional email address. However, one time she placed an order using her personal email address. OvernightPrints.com stored both of these addresses in their marketing database but didn’t record that the addresses belonged to the same person.

OvernightPrints.com’s records showed that Laura was a loyal customer when she used her professional email address. They sent her the following year-end coupon for 25% off any order:

But OvernightPrints.com also had Laura’s personal email address on file. Clearly, the personal email address wasn’t loyal to them. It had only placed one order. In a bid to “activate”  this dormant customer, they sent a sweeter deal to the email address that had only ordered once:

We wanted to give OvernightPrints.com a chance to respond to Laura’s disappointment at finding her loyalty was not rewarded. Here is the email from their customer service department:

Part of our marketing strategy to reactivate “inactive” customers is to send them different offers, which sometimes offer greater discounts.  We also have a Loyalty Program for our top customers, which provide excellent discounts as well. Should your purchases reach the level that qualifies you for the program, we would very much like to invite you to participate.

So it seems that Laura is neither loyal nor disloyal enough. OvernightPrints.com uses their technology to categorize their customers, and it seems some categories are luckier than others.

What lesson should we all learn from this marketing faux pas? (Besides that ordering infrequently from OvernightPrints.com is the best way to score deeper discounts). If a company tries to use technology to “cheat” some customers, the customers will find out. And that will erode their relationship with the company. No one stays loyal to a company (or friend) that doesn’t show loyalty to them. Carefully use your marketing technology to bring you closer to your customers, instead of further away from them.

Small Business Marketing for Retailers

Friday, December 11th, 2009

On “Getting Down to Business” with David Weatherholt, we talked about the holiday shopping season and what it means for retailers.

Black Friday has come and gone, and with it, many retailers hopes of enjoying a profitable November. In this podcast, I explain the history of Black Friday and Cyber Monday. This year’s performance was worse than last year’s already abysmal showing– consumers spent almost 8% less per person this year than last, resulting in an overall revenue increase of just 0.7%. Black Friday this year showed that we need to revolutionize our concept of how retailing works– for both large and small businesses. Consumers have changed the way they shop. To learn more, listen below:

Download the small business marketing for retailers MP3 file here. (13.38MB)

Growing Profits through Habits

Friday, November 13th, 2009

Using your customer’s habits to your advantage

Neale Martin has a great book out– Habit: The 95% of Behavior Marketer’s Ignore. It’s enlightening, and his research is well documented. The basic premise is that our conscious mind can only think of one thing at a time, so it hands off as much responsibility to our subconscious mind as possible. The subconscious mind then makes decisions based on cues from the environment and what was successful in the past.

As you might expect, most regular purchase decisions get delegated to the subconscious mind. Seriously, who evaluates their toilet paper purchases each time they stock up?

One particular passage in Habit really caught my attention. Martin discovers a truth explored by Steve Yastrow in his book We:The Ideal Customer Relationship: your existing customer relationships contain vast growth potential for your company. It’s all about latent profit.

“The power of advertising to maintain and strengthen the habits of existing customers is far greater than its ability to persuade noncustomers to try a product. Seeing an advertisement in a magazine or on a billboard for your brand reinforces your choice. Similarly, seeing a product you already own used in new ways can create an immediate trial opportunity. Marketers often neglect reinforcing behavior because they are pressured to acquire new customers, often at the expense of their existing, and profitable, current customers (Neale Martin, Habit, p.118).”

As we all know, buying new customers is expensive. It involves getting someone to notice your product, realize what it could do for him, trust you enough to try it, then find a channel for purchasing it. And that’s if everything goes according to plan.

But influencing a customer that already trusts and relies on you to buy more or buy other products from you isn’t expensive. Most of the work is already done for you because of your relationship with the customer.

Here’s an example. A client sent out a blanket mailing to households within a three-mile radius of their location offering a special discount to new customers only. They stuck to the standard marketing tenet of discounting to attract new customers, but they risked alienating existing customers. (Customer surveys later proved this point as current customers complained their neighbor, relative or friend got a better deal on services.)

There are several lessons to be learned from this incident.

  • First, if you are going to show an advertisement to the general population, you had better give an offer anyone can use.
  • Promotions don’t occur in a vacuum. People talk and like to compare deals.
  • Finally, it is more valuable to reinforce the behavior of a current customer by rewarding him and encouraging him to try a new product than to hope you receive a one-off visit purchase from a stranger.

The moral of the story (and point of the article) is to value your customers and realize how much latent profit exists in your current customer base.

We often call current customers, “existing customers.” That means potential customers don’t even exist yet! It takes much effort to call potential customers into existence, but relatively little effort to improve your relationship with your customers. A customer who is loyal to your company will buy more products more often and will rave about you to their friends.

Existing Customers Create New Customers

Friday, October 23rd, 2009

Companies spend a disproportionate amount of money on trying to acquire new customers. Let’s say a company wants to find just ten new customers. How much could they expect to spend?

The cost to gain 10 new customers via TV, Pay Per Click or Direct Mail

Let’s hope that company is selling something that has a margin of more than $80, or they won’t see any profit. If only they knew that keeping existing customers happy naturally creates new customers. And it costs very little.

More often, companies treat existing customers like chopped liver. They forget about—or worse, punish– someone as soon as he buys something from them.

If you are a satellite television customer, the cable company will be glad to give you three months of free cable to become their new customer. If you are an existing cable customer, you know to expect the onerous contracts with rate raises and dread calling the dismal customer service when your signal goes out.

Companies focus on acquiring new customers at the expense of maintaining existing customers for mainly two reasons:

  1. That’s what they’ve always done. When a product or company is brand new, there are no existing customers. All marketing efforts have to be focused on gaining new customers. This marketing inertia carries through well after a company has become established.
  2. Those evil competitors! We must act now to steal market share away from them! What companies don’t think about is that it costs more to steal a customer from a competitor than to keep an existing customer.

An existing customer who is loyal to your company will buy more products more often and will rave about you to their friends. We all nod appreciatively when we are told that word-of-mouth and referrals are the most powerful motivators to encourage customers to try a new product, but then we go on with our e-mail blasts and Val-Pak coupons. Instead, we should be creating that word-of-mouth by inspiring our existing customers to rave about us!

But how do you create raving customers? Anticipate what would delight them. Then, deliver it! Netflix recently sent me an email that because of their increased operational efficiencies, they would be lowering my monthly subscription fee. Oh, and by the way, now I can watch thousands more movies instantly, and they created a movie player that works on my Mac. All without me having to ask. I’m delighted! I’m loyal! And here I am telling you about Netflix.

But what if you don’t know what would delight your customers? Ask them. A part of my consulting work is finding out what a company’s favorite customers love about them and to help them do that for every customer.

Remember, if we have existing customers, that means prospective customers don’t even exist yet. Companies should only spend a proportionate amount of their marketing budget on customers who don’t exist yet. Don’t invest yourself too heavily in imaginary friends.

Instead, we should focus a higher proportion of our efforts on relationships with existing customers. If we delight them, they will reward us by buying more from us with higher frequency. And, as a benefit, they will create our new customers for us.

Small Business Marketing Plan Podcast

Tuesday, October 6th, 2009

I’m a regular guest on Dave Weatherholt’s small business radio show, “Getting Down to Business.” In my first interview on the Alaskan radio show, we talked about the market analysis and market research portion of a business plan for small businesses.

Dave also gave me an opportunity to explain my marketing philosophy to his listeners.

Download the market analysis MP3 file here. (9.86MB)